True Religion, known for colorful jeans that sell for up to $360 at its specialty boutiques, has been hit by falling demand as consumers switch to lower-priced denim. The company's sales have fallen 12 percent over the last three quarters.

"True Religion has all of the hallmarks of a fad. It enjoyed its heyday, over-expanded, and lost its core customer," said analyst Edward Yruma of KeyBanc Capital Markets.

"The company has undergone a number of fashion missteps. More importantly, we question the relevancy of the brand, particularly given its premium price point."

Weak demand for True Religion's women's range in particular, including jeans and shirts with bold Mexican patterns, prints and colored stitching, forced the company to cut its full-year profit outlook in July.

True Religion could be worth $26-$37 per share if it went private, said Diana Katz, an analyst with Lazard Capital Markets.

DENIM FADES

However, with the premium denim industry struggling, it is more likely to receive a bid at the lower end of the range, Katz said in a note to clients.

Guess Inc., known for its namesake jeans, has resorted to discounting to clear excess inventory as shoppers look for good bargains.

The Wall Street Journal reported earlier that the company had fielded buyout proposals from private equity firms and apparel industry companies.

True Religion said it had formed a special committee comprising non-management directors and had hired Guggenheim Securities LLC as financial adviser and Greenberg Traurig LLP as legal counsel to assist in the review.

Guggenheim Securities and Greenberg were not immediately available for comment.

True Religion, founded in 2002 by CEO Jeffrey Lubell, made its mark with jeans that featured colorful reinforced stitching and oversized low flap pockets.